Question

use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. more specifically, r the model. also, in the statement of cash flows column, classify the cash flows as operating activities (oa), investing activities (ia), or financing activities (fa). note: enter any decreases to account balances and cash outflows with a minus sign. leave cells blank if no input is needed.
home furnishings
effect of events on the financial statements
events\tassets\t=\tliabilities\t+\tstockholders equity\tincome statement\tstatement of cash flows
\tcash\t+\tinventory\t=\taccounts payable\t+\tcommon stock\t+\tretained earnings\trevenue\t-\texpenses\t=\tnet income
purchase inventory
return inventory
record discount
paid accounts payable

Explanation:

Step1: Purchase inventory

When inventory is purchased, cash (an asset) decreases if paid in cash. If on - account, accounts payable (a liability) increases and inventory (an asset) increases. There is a cash outflow in the operating activities section of the cash - flow statement.
Cash: - amount paid; Inventory: + amount of inventory; Accounts Payable: + amount if on - account; Statement of Cash Flows: - amount paid (OA)

Step2: Return inventory

If inventory is returned, inventory (an asset) decreases. If it was on - account, accounts payable (a liability) decreases. If cash was paid initially and is refunded, cash (an asset) increases. There is a cash inflow in the operating activities section of the cash - flow statement.
Inventory: - amount returned; Accounts Payable: - amount if on - account; Cash: + amount refunded; Statement of Cash Flows: + amount refunded (OA)

Step3: Record discount

If a discount is received on inventory, it reduces the cost of inventory (an asset). It also reduces the amount owed if it was on - account (liability). There is no direct cash flow impact in most cases.
Inventory: - discount amount; Accounts Payable: - discount amount

Step4: Paid accounts payable

When accounts payable is paid, cash (an asset) decreases and accounts payable (a liability) decreases. There is a cash outflow in the operating activities section of the cash - flow statement.
Cash: - amount paid; Accounts Payable: - amount paid; Statement of Cash Flows: - amount paid (OA)

Answer:

Events	Assets		=	Liabilities		+	Stockholders' Equity			Income Statement			Statement of Cash Flows
Purchase inventory	- amount paid	+ amount of inventory		+ amount if on - account									- amount paid (OA)
Return inventory	+ amount refunded	- amount returned		- amount if on - account									+ amount refunded (OA)
Record discount		- discount amount		- discount amount
Paid accounts payable	- amount paid			- amount paid									- amount paid (OA)